Income Tax (Trading and Other Income) Act 2005 section 624

Income where settlor retains an interest

Section 624 deals with how settlement income is taxed when the person who created the settlement (the settlor) keeps an interest in the settled property.

• Income arising under a settlement is treated as the settlor's income alone if it arises during the settlor's lifetime and from property in which the settlor retains an interest
• Where the settlement is a trust, the trustees' expenses cannot be used to reduce the amount of income attributed to the settlor
• Exceptions apply for outright gifts between spouses or civil partners, certain types of income, and gifts to charities
• Further detail on what constitutes a settlor having an interest in property is provided separately in section 625